October 2018 Industry updates

Residential Lettings, legislation and Industry updates October 2018. 

Over the last few years landlords (and Agents), have been bombarded with legislation. Gas safety, HMO regulations, HMO licensing, Smoke alarms, CO2 detectors, Legionella Risk Assessments etc. etc. and come with heavy fines so know your responsibilities, otherwise it could be VERY costly!

Well the additional legislation continues and the only good news I could find I am afraid, was the intention to regulate the industry once and for all, so the good landlords will definitely benefit as they will no longer be put in the same category as bad ones. In April, the government started the process by introducing a register of “Rogue Landlords” and they have pledged to regulate the market and have EVERY Landlord and/or Agent properly registered and accredited over the next couple of years.

However, I was at a conference in April of this year when the register was announced.  Interestingly enough, at the end of the presentation during question time, one delegate asked the speaker (a renowned property solicitor) the question “when will we have a register for Rouge Tenants?” only to be told to by the speaker (with a wry smile), that, that would be highly unlikely, as there would not be any votes in that!   Sadly, I think you could be forgiven for thinking that response, as a stark reminder of the poor way we are governed as a nation presently.

Apart from the loss of tax breaks, the introduction of Banning Orders for Landlords and Agents who fail to comply with the law and the announcement of the tenant Fee Ban in April 2019 there have been several other additional laws introduced (or about to be introduced) that we strongly recommend you need to keep a sharp eye on.

The first is the change in HMO licensing laws which mean that the “licensing” regulations are changing, from five or more, unrelated people over three floors, to five or more unrelated people regardless of the number of floors.   Industry watchdogs and specialists anticipate, that this should increase the number of HMO licences by 160,0000 nationally. At the same time, we are informed that they are also introducing new minimum room sizes into licenced HMOs only, at this point.

The minimum room size we are told for one person is 6.51 Sq. M, however (and this is really important), they have in addition, also stipulated that the minimum height for this calculation, is 1.5M which means landlords with rooms in roofs (attic rooms), may want to check, to ensure they are legal. If you already have a licence, then it will only come into force when you are renewing your licence. For more information, the RLA have provided an excellent article on minimum room sizes  (https://www.rla.org.uk/landlord/guides/room-sizes-for-houses-in-multiple-occupation.shtml )

The starting (entry) point for an HMO remains the same, as it has since 2007 at “Three or more unrelated people in a rented property” If you have an HMO then you are automatically governed by the HMO legislation (HHSRS etc.) so nothing has changed there.

Also, there is the proposed change to widen the scope of electrical testing.  I am sure you are all aware that this legislation has already been in force  since 2007,  in ALL HMO’s (NB. That is for properties with 3 or more unrelated people, not just licenced HMOs’), and very soon it is anticipated that it will become law for all rental properties. Electrical certification in non-HMOs are currently discretionary (although many will disagree.*i.e.There is currently no statutory requirement to have annual safety checks on electrical equipment as there is with gas, but the housing act does state clearly that the electricity supply in a rented property must be safe and in reality the only way you know if it is safe is if you have it tested!   We always advise to do this and all of our managed properties have 5 year fixed wiring certificates and annual visual checks to demonstrate that our clients are responsible landlords and we are a professional agency.  So I would advise all landlords to follow this model as  good practice.  If you do have an issue with the electrics in your property and there is damage, or injury then you most definitely will be held accountable.  Although but we have been advised they will most likely keep the regulations the same as the current HMO regulations, we anticipate therefore we will see “Five-year fixed wiring checks” with annual interim checks, at some point in October 2018.  It is worth pointing out that this change (in principle), is already written into the 2016 Housing Planning Act, so all the paperwork is prepared, voted on and agreed by parliament.  So it just needs a rubber stamping  by the minister responsible.   NB. latest update 19/10/2018:  Due to the additional time taken with Brexit, the minister and his committee, are still deciding on the regulations of “How”(the nuts and bolts) they will manage this law. The latest estimate is in the next few months.  i.e.  The minister responsible can simply enact this at his or her discretion now it already has parliamentary approval by vote.

*There are of course many more legal updates and reminders, we are just highlighting some of them for you. *

The EPC laws were updated in April 2018 and only EPCs Currently E and above are allowed to be marketed for rent, so NO F or G’s can be marketed for let without an exemption certificate.

Minimum Energy Efficiency Standards (MEES), introduced April 2018 also ensure no let may go ahead either if they do not meet the new EPC standards and again, please note, the rules are changing again in 2020.

Also “Banning Orders” are now effective for both Landlords and agents, who do not comply with such UK legislation such as “not complying with improvement notices, Breaches of HMO licencing, harassment or unlawful eviction, Gas / electrical safety, Failure to do Right to Rent etc. etc. For more information simply go to the link below which also gives you more information on Rogue Landlord database, non-compliance penalties (fines) and rent repayments:

https%3A%2F%2Fwww.gov.uk%2Fgovernment%2Fpublications%2Fbanning-orders-for-landlords-and-property-agents-under-the-housing-and-planning-act-2016&usg=AOvVaw1seuZ5eRUY9LBwf7tXDdGQ

Perhaps most worrying, is the change in the way government funding has changed. Now central government allows the councils to keep ALL of the money they make from prosecutions regarding housing Non-Compliance, so there is now, a real incentive for councils to prosecute now, as they keep all the fines! In essence, it is “a potential income stream, for cash strapped councils”. Please feel free to check out our website and you may also want to look at our property blog which highlights and discusses. many of these issues, or discuss your property needs and options, with John on 0191 212 2020.